EasCorp and MEMBERS Trust Partner to Create Industry's First New England Trust Office

BURLINGTON, Mass. and TAMPA, Fla. - Members at New England credit unions will soon have wider access to trust services thanks to an alliance between EasCorp and MEMBERS Trust Co. Under the agreement, EasCorp's CUSO, 1909 Financial Advisors, LLC, will establish staff and manage a trust agency office to provide services within the region. The arrangement enables credit unions to implement trust services under a cooperative alliance with 1909 and share the start-up costs. The CUSO will use MEMBERS Trust, a subsidiary of CUNA Mutual Group, for back-office services, such as record keeping and reporting, development plans and fiduciary services. "Trust services have been the one missing link in credit unions' ability to become true, `full-service' institutions," said Alan Bernstein, EasCorp senior vice president, business development and strategic planning. "We're excited about offering an onsite trust office because, now, credit unions can be full service at a fraction of the cost they would normally have to pay to go into the business." The start-up costs, annual fee and revenue are shared by EasCorp and the credit union, Bernstein said. The "modest, upfront fee" is "below five figures" when compared to starting a trust services program from scratch, including hiring a trust officer, he added. Tom Walker, president/CEO of MEMBERS Trust, said not only will the alliance serve members' unique trust needs but it will also provide credit unions with a "long-term source of fee income." The regional trust agency, scheduled to open for business in early summer, is a unique pact because generally, a credit union would contract directly with MEMBERS Trust to set up either an agency office, which requires a trust officer to be located at the credit union or a representative office, which employs a trust liaison making recommendations for trust services. With this arrangement, an EasCorp credit union client would start and continue the process directly with the corporate, Bernstein said. The $1.3 billion EasCorp serves 350 credit unions throughout the country. This is the first time MEMBERS Trust has worked with a corporate credit union. Launched in 2003, it is the only credit union-owned trust company with a charter that allows it to serve credit unions in all 50 states. Today, it has 17 agency offices and 33 representative offices. Going back, EasCorp's interest in offering trust services sprang from conversations with credit union clients with strong interest in serving older members, especially those approaching retirement age, Bernstein said. They wanted services tailored to that group including trust services. Bernstein spoke with Walker and his associates, floated the idea and it took off from there. Walker said credit unions are starting to fill a void left by community banks that have either consolidated or shut down their trust service divisions. For some in the industry, it has been a tough hole to fill. The Delaware Credit Union League's CUSO DELCU Financial Services, LLC, ended its nearly four-year trust services partnership with INA Trust, FSB last December citing a lack of interest among that state's credit unions. The timing for this alliance could not have come sooner given the amount of wealth baby boomers have accumulated over their lifetimes, Bernstein said. The baby-boomer generation represents a third of the population and controls three-quarters of the wealth, according to EasCorp and MEMBERS Trust. Collectively, boomers account for $2.5 trillion in spending power and they are beginning to look to their financial institutions to help them with wealth management and transfer. Given the long-term relationship building process commonly associated with trust services, EasCorp has a planning horizon that looks out over the next 10 years, Bernstein said. "Over the next 25 years, we're going to see baby boomers - who represent the largest generation ever - move into retirement and estate planning," Bernstein said. "Credit unions have always had good instincts about what their members will need next, and they know this is an ideal time to add trust services to their product line." "The aging population is approaching their power years," Walker said. "They have special needs and one of them is retirement management. Credit unions are in a position to return `service' back to trust services." Indeed, rapid consolidation has led to a number of areas in the banking industry being shuttered or scaled back including trust services and certain areas of business lending. For many banks, a customer still generally needs a minimum of $1 million or more in assets to qualify for trust services. Credit unions tend to serve members with at least $250,000 or less in assets depending on their trust and planning needs. The EasCorp/MEMBERS Trust partnership will entertain alliances with credit unions as small as $20 million in assets and up, Bernstein said. "It's really a combination of assets and the type of members [a credit union] serves," Bernstein said. At its recent annual meeting, EasCorp shared the news of its alliance with MEMBERS Trust to attendees. The corporate expects to have hired a trust officer within the next 30 to 60 days and some early partnership discussions have already started with at least two credit unions, Bernstein said. Meanwhile, EasCorp will continue to get the word out about its newest offering via seminars and other means. "Unfortunately, credit unions don't have a lot of identity with trust services," he said. "This may be the last area of banking credit unions traditionally had to send members down the street to because they didn't offer it." -